RIA Compliance and Practice Management Blog

Top RIA Compliance News Articles for the Week of April 23rd, 2021

Posted by RIA in a Box

Apr 30, 2021 4:50:10 PM

Top RIA compliance articles focus on the SEC's scheduled rule reviews, tips for remote exams, and possible anti-money laundering policy plans for RIAs. 

Each week we are giving you our weekly report highlighting the top compliance news articles from various industry news publications. We have selected the most relevant and important news articles related to registered investment adviser ("RIA") compliance and regulatory issues. This week's recap focuses on The North American Securities Administrators Association's ("NASAA") annual report on RIA oversight, the Security and Exchange Commission's ("SEC") Ad Rule, and the Department of Labor's ("DOL") fiduciary exemption. 

Here's our top investment adviser compliance articles for the week of April 23rd, 2021:

Download Our Free RIA Cybersecurity Compliance Checklist

      1. State-registered investment advisers hold steady at more than 17,000 (Author – Mark Schoeff Jr., Investment News)

This article provides a quick overview of NASAA's annual report on RIA oversight, specifically related to the amount of investment adviser firms in the United States registered at both the state and SEC levels. The number of investment advisers at the state level is consistent with past years, as the total for 2020 was recorded at 17,454. Mark Schoeff Jr. also points out that approximately 13,900 investment advisers were registered with the SEC in 2020.

Other notable findings regarding state level RIAs include the following: 1) Most firms are comprised of one or two licensed professionals exclusively, 2) for the most part, firms are charging clients based on assets under management, and 3) continuing education requirements are currently being considered. Any changes to continuing education requirements would have to be adopted by each state individually through regulation or legislation.

     2. The SEC's Ad Rule: New Strategies, New Risks (Author – Samuel Steinberger, Wealth Management)

Samuel Steinberger shares how advisors can strategically take advantage of the SEC’s new Ad Rule and the potential downsides to be aware of. One strategy discussed involves paying close attention to the timing of initiating a parting of ways with a client along with campaigns or requests seeking client reviews. Industry experts seem to agree that the new rule places pressure on advisors to “terminate the relationship gracefully” and help clients find a new path if they are not a good fit for the advisor.

Per the SEC guidelines, advisors must display the link or other means of accessing all or a representative sample of the testimonials, including negative and positive reviews.

      3. 17,500 state-registered RIAs to get fee guidance from NASAA (Author – Tobias Salinger, FinancialPlanning)

NASAA is reported to be preparing new guidance on compensation models for RIAs registered at the state-level. This article sheds a light on the most significant challenges for smaller firms, with respect to compensation models, including regulatory scrutiny on alternate fee models and the process of registering in a new state. The regulatory policy group of NASAA’s RIA section states the organizations intentions to engage in discussions about evolving advisor fee models with investor advocacy groups and industry groups, as well as create a guidance document on investment advisor alternative fee models.

     4. Retirement Plan Advisors Are In DOL's Crosshairs, Experts Say (Author – Tracey Longo, Financial Advisor)

A popular topic for RIAs, the DOL’s fiduciary exemption is discussed in this article as it brings about scrutiny on firms advising clients on 401k rollovers and retirement related investments. Tracey Longo reiterates the conclusion from the DOL that rollovers fall under fiduciary advice. Longo also addresses the potential financial and reputational risks for RIAs who are investigated for wrongdoing, including a 20% penalty or disciplinary disclosures to clients. RIAs are advised to pay close attention to both the SEC rules and ERISA standards when determining what is permissible for matters related to retirement investment advice.

      5. Why Family Offices Are in SEC’s Crosshairs (Author – Melanie Waddell, Think Advisor)

Melanie Waddell provides an overview on the SEC’s “Reg Flex” agenda and how it puts a spotlight on family office rule exemptions. Industry experts speculate how the SEC will respond after the recent default of a family office capital management firm with $10 billion assets under management. An important takeaway from the article is that the SEC will likely assess what type of family offices qualify for exemption from registration and the potential impacts of large family offices on markets. 

View our Best Practices for Email Surveillance Checklist

Don't forget to check out last week's top RIA compliance news articles that focus on the Department of Labor’s “DOL” fiduciary rule guidance, a push for clarification on the Security and Exchange Commission’s (“SEC”) Regulation Best Interest ("Reg BI"), and cybersecurity attacks and prevention tips.

Topics: RIA Operations, RIA Compliance, RIA Technology

RIA in a Box LLC is not a law firm, investment advisory firm, or CPA firm. RIA in a Box LLC does not provide legal advice or opinions to any party or client. You should always consult your relevant regulatory authorities or legal counsel if applicable.

RIA Compliance & Practice Management

Stay up to date on the latest RIA compliance, operations, and technology topics.

Hear from industry experts as they keep you up to date on the latest regulatory developments and practice management topics.

Subscribe to Email Updates

Recent Posts